Selling Your Home For Less Than Market Value

There are many reasons to decide to sell a home, and possibly as many reasons to sell for less than a home is worth. The significant differentiation for those selling at a loss is whether they have a mortgage or not.

When a mortgage is in play, the bank will issue a loan for the difference, unless you can qualify for a short sale. In other words, you would have to qualify for a hardship that would allow the bank to waive the remaining balance that is not covered by the sale of the property.

In still other cases, parent may want to sell their property to their children to avoid inheritance or gift taxes. So, instead of charging Junior, who is now 45 with three kids of his own $750,000, Dad will sell the property for $1. That is all fine and good if there is no mortgage.

However, if Dad has refinanced and has a mortgage still, well into retirement, then his son will have to qualify for at least the value of the remaining mortgage.

Dad’s Estate Is Worth More Than $5.5

If Dad has been busy saving his money and investing in property, then he could be (and in this example) is worth more than $5.5 million. In that case the heirs to the estate will have to pay out on capital gains taxes.

Though, if dad just has the house and it is worth less than $5.5 million, then there is no federal tax on the estate if the family moves into the home. Rather than selling the house to them, you may instead just do a quit claim deed giving them the house for whatever they choose.

If there is no mortgage, that means they can decide whether they want to live there or sell it. They may even decide to rent it out to other people.

Mortgage And Title Differences

People often hear owning a home and think of only one aspect — the mortgage that tethers them to it. Yet, a mortgage just says who is paying the bill on it. Separately, there is a title that is recorded with the county or local government. It gives an indication of who has a claim to the property.

Many elderly parents with grown children will put their kids’ names on the title for other reasons other than with giving their heirs an inheritance. They will do so to make it easier to enter a nursing home using the home as collateral to pay the nursing home or retirement home bills.

There are rights however, and it is worth mentioning the main one. It generally requires a signature of the party that is entered onto the title along with a notary to add people to a title. Otherwise, if kids are about to buy a property and the title company does a search, the kids may find that they are already on their father’s property when they never signed anything.

It actually constitutes fraud and may be punishable by law, depending on local laws. Parents: always get your kids’ permission and then get their signature on the title. Doing otherwise can cause them hardship later and cause a rift in your relationship.

In addition, if your adult child does sell their own property through a short sale it will look bad if they have their name on title to your property. They may have no financial hand in your property and you may be trying to be nice. Give them gifts only as long as they agree to them.

What to Expect from

Have you ever plugged yourself into the news for awhile and noticed that practically all the ‘important’ stuff is merely a few stories getting played over, and over and over again? If you have then you’re not alone. In reality, the news is exactly like this, although many people may disagree.

Many people seem to believe that the stories in the news are actually quite important. So much so that they’ll openly comment, suggest, bring up and try to include these stories in everyday conversation.

Remember the last time you were sitting down with uncle Bill and all he wanted to talk about was what was happening between presidential candidate A and B? Or how the most recent natural disaster was an indication of something, foreshadowing the next major hurricane?

There’s a reason why people are sucked into this content and part of it is their own fault. Being careless with one’s own time and what you consider as important and what you consider as not important is a big factor. Some people have not developed priorities and news will enter in and seem important. You will often see such people repeating nearly everything they hear on the news during frequent news periods such as presidential elections.

The other reason is human nature. People are drawn to open loops. In fact, your brain would rather have a sense that it’s reached a conclusion with something and that a matter seems settled in whole. Your brain doesn’t like it when you encounter what’s called an open loop, where you’ve heard just the beginning of an event. Some disaster or horrific thing just occurred on the other side of the country or the other side of the world, and people naturally want to know what happened next, and what happened after that, and why.

The solution to this cycle is simple. Simply remove yourself from the noise. Stop caring about petty issues. Stop caring about the news and stop assuming every bit of news actually matters at all.

Reporters are paid for getting readers. Headlines are written to hook your attention and suck you into the article. Simply removing yourself, or more so removing the news from your own world, does a tremendous amount of decluttering (in a good way) for you.